AUDITING  STUDIES 

JOHN  RAYiMOND  WILDMAN 


1917 

THE  WILUAM  G.  HEWITT  PRESS 
61-67  NAVY  ST..  BROOKLYN.  NEW  YORK 


AUDITING  STUDIES 


BY 

JOHN  RAYMOND  WILDMAN.  M.C.S.,  C.P.A. 

PROFESSOR  OF  ACCOUNTING  IN  NEW  YORK  UNIVERSITY 


1917 

THE  WILUAM  G.  HEWITT  PRESS 
61.67  NAVY  ST..  BROOKLYN.  NEW  YORK 


\\f 


Copyright,  1917 

BY 

JOHN  R.  WILDMAN 


FOREWORD 

In  the  preparation  of  students  for  entrance  into  the  profes- 
sion of  accountancy  the  teacher  has  to  meet  the  criticism  that 
such  students  are  only  theoretically  trained.  Theory  is  the 
logical  foundation  for  practice;  however,  theory  alone  does  not 
make  for  success  any  more  than  does  practice  without  theory. 
The  ideal  instruction  seems  to  combine  theory  with  practice. 

It  is  with  the  idea  of  supplementing  the  theory  contained  in 
the  author's  text  on  auditing  that  the  material  in  this  syllabus 
has  been  arranged.  From  "Principles  of  Auditing^*  one  may 
learn  the  theory  as  set  forth  therein.  Through  the  use  of  "Audit- 
ing Studies"  one  may  see  the  application  of  the  principles  to  the 
problems  as  they  arise  in  practice.  If  the  work  is  carried  out 
in  the  study  as  outlined  in  the  text  the  student  should  have  a 
fairly  complete  set  of  working  papers.  To  the  classroom  student 
even  laboratory  practice  based  on  experience  is  theoretical  and 
to  such  students  so  this  study  will  appear.  It  is,  however,  to 
this  class,  that  this  work  will  be  most  helpful  since  it  will  enable 
them  to  take  along  into  the  field  a  set  of  working  papers  for 
reference  purposes. 

John  Raymond  Wildman. 

New  York  University, 

January  4,  1917. 


3G0398 


JONES  &  PARKER  Memo  of  Engagement  No.  150 

Certified  Public  Accountants  Assigned  to 

Office,  January  4,  1915 

1.  Client,  Warburton  Desk  Company 

2.  Address,  265  Broadway,  New  York 

3.  Conference,  John  Parsons,  President 

4.  Letter,  dated  January  2,  1915 
5  Telephone,  Barclay  1894 

6.  Report  to  be  addressed  to.  President 

7.  Account  to  be  charged  in  ledger,  Warburton  Desk  Com- 

pany 

8.  Examination  to  be  made  of,  same 

9.  Where  located,  as  above 

10.  Nature  of  business,  manufacturer  of  desks. 

11.  Nature  of  work.  Audit  for  the  year  ended  December  31, 

1914 

12.  When  to  be  commenced,  January  12,  1915 

13.  Probable  time  required,  four  weeks 

14.  Accountants  required,  c«ie  senior 

15.  Rates,  usual 

16.  Remarks,  Report  required  not  later  than  March  15,  1915 


AUDITING    STUDIES 

THE  WARBURTON   DESK   COMPANY 

History 

Report  on  conversation  with  Mr.  Hoyt,  Secretary  of  the 
Warburton  Desk  Company  relative  to  thd  history  of  the  com- 
pany. 

Mr.  Hoyt  stated : 

"The  Warburton  Desk  Company  was  incorporated  January 
1,  1908  for  the  purpose  of  manufacturing  desks  and  other 
office  furniture.  The  stock  of  the  company  is  held  largely  by 
the  three  men  who  organized  it,  Mr.  Parsons,  Mr.  Davis  and 
myself.  We  have  all  had  more  or  less  experience  in  work  of 
this  character.  Mr.  Parsons,  the  President  of  this  company, 
has  a  controlling  interest  in  the  Parsons  Desk  Company,  and 
Mr.  Davis  and  myself  operate  the  Davis-Hoyt  Company,  a 
company  manufacturing  chairs,  costumers  and  other  small 
articles  of  office  equipment.  The  company  has  progressed 
nicely,  making  a  satisfactory  profit  each  year,  but  this  year 
we  do  not  seem  to  be  doing  as  well  as  we  should.  Conse- 
quently we  called  you  in  to  look  things  over." 

Cash 

Count  of  the  cash  on  hand  at  6  P.  M.,  January  12,  1915, 
showed  the  following: 


Checks 

Anderson  &  Bailey, 

1/10/15 

$325.00 

Crane  &  Goddard, 

1/  7/15 

50.00 

W.  W.  James, 

1/  9/15 

150.00 

Desk  Supply  Company, 

1/25/15 

100.00 

Walters  &  Thomas, 

1/13/15 

32.15 

$657.15 


S  *£  * 


^rt 


Auditing  Studies 


Currency : 

$5.00  Bills 7  $35.00 

1.00  Bills 5  5.00 

Half-Dollars 3  1.50 

Quarters 2  .50 

Ten-Cent  Pieces 11  1.10 

Pennies 4  .04 


43.14 
25.00 


I.  O.  U.  of  Cashier,  dated  12/15/14 

Check  of  P.  F.  Williams,  dated  11/30/14,  with  nota- 
tion of  bank  on  it,  "Not  sufficient  funds" 110.00 

English  sovereign 4.86 


Total $840.15 

Petty  Cash 
Count  of  petty  cash  on  hand  at  6.20  P.  M.,  January  12,  1915, 
showed  the  following : 


Bills: 

$10.00. 

20 

$200.00 
180.00 

5.00. 

36 

1.00. 

47 

47.00 

$427.00 

Silver: 

$  0.50. 

25 

$12.50 

.25. 

46 

11.50 

.10. 

116 

11.60 

.05. 

84 

4.20 

.01. 

126 

1.26 

41.06 

Vouchers : 

Nos.  620 

Dated  1/  4/15 

$10.00 

1 

t( 

ft 

1.25 

2 

it 

1/  5/15 

3.63 

3 

tt 

tt 

1.28 

4 

it 

1/  7/15 

4.20 

5 

it 

tt 

.61 

6 

tt 

1/11/15 

6.20 

7 

« 

(( 

2.38 

8 

« 

1/12/15 

1.62 

9 

otal . . 

It 

« 

.77 

31.94 

T 

$500.00 

4 

Auditing  Studies 

The  cash  book  for  January,  1915,  which  included  the  trans- 
actions of  January  12,  1915,  was  footed  by  the  accountant  with 
the  following  result : 

Debit  side $51,287.10 

Credit  side 5,625.50 

Inasmuch  as  the  pass-book  had  not  been  balanced  since 
November  30,  1914,  the  accountant  had  it  sent  to  the  bank  to 
be  balanced  as  of  January  12,  1915,  and  at  the  same  time  sent 
a  request  to  the  Packard  Place  Bank  for  a  certificate  as  to  the 
amount  on  deposit  to  the  credit  of  the  Warburton  Desk  Com- 
pany on  January  12,  1915.  The  bank  responded  with  a  certifi- 
cate showing  the  balance  on  January  12,  1915,  to  be  $49,794.46, 
(which  included  interest  credited  December  31,  1914,  amounting 
to  $48.50).  The  bank  also  returned  to  the  Warburton  Desk 
Company  the  balanced  pass-book,  together  with  the  cancelled 
vouchers. 

The  following  facts  were  ascertained  by  the  accountant: 

The  currency  on  hand  January  12,  1915,  was  received  as  the 
result  of  cash  sales  on  that  date. 

The  checks  listed  below  had  been  issued,  but  had  not  as 
yet  passed  through  the  bank : 

Nos. 

14819—2/  4/13,  A.  B.  Smith $100.00 

22615 — 1/  7/15,  The  Rappaport  Hinge  Company 160.25 

22620-1/  8/15,  The  Broun-Green  Company 22.50 

22636—1/10/15,  William  Fisher 400.00 

22638—1/10/15,  The  Ironton  Screw  Company 52.26 

22640—1/11/15,  Wm,  Harrison  Company 2.60 

22641—1/11/15,  The  Pacific  Novelty  Company 5.20 

22642—1/11/15,  The  Underwood  Typewriter  Co...  1.00 

22643—1/12/15,  The  Anson- Ackroyd  Company 175.00 

Total $918.81 

The  check  issued  to  A.  B.  Smith  was  in  payment  for  serv- 
ices. A  letter  sent  to  Smith  December  10,  1914,  to  his  last- 
known  address  was  returned  by  the  post-office,  marked  "not 
known." 

7 


Auditing  Studies 

Among  the  cash  receipts  for  January,  1915,  was  a  check 
from  the  Canadian  Desk  Company,  received  on  January  11, 
1915,  for  $252.20.  The  custom  of  the  bank  is  to  accept  checks 
on  Canada  for  collection  only,  and  not  to  credit  them  until 
collected. 

A  comparison  of  the  daily  receipts  and  deposits  for  the 
month  of  January,  1915,  revealed  the  following: 

Receipts.  Deposits. 

January    4 $1,506.21  $725.05 

5 1,225.17  1,506.01 

6 605.00  1,225.17 

7 2,160.10  604.50 

8 1,600.25  2,160.00 

9 503.98  1,600.25 

11 728.26  503.78 

12 700.29  728.16 


$9,029.26  $9,052.92 

It  is  the  custom  of  the  bank  to  deduct  exchange  from  the 
face  of  the  deposits.  The  above  differences  are  the  result  of 
this  practice.  It  was  also  ascertained  in  a  similar  way  that  the 
exchange  deducted  from  the  face  of  the  deposits  during 
December  was  $3.50. 

On  December  27,  1914,  a  note  of  Lyle  &  Company,  of  New- 
ark, N.  J.,  dated  11/1/14,  due  1/1/15,  without  interest,  for  $3,- 
000,  was  sent  to  the  bank  for  collection.  The  bookkeeper 
stated  that  he  had  heard  nothing  from  the  bank  regarding  this 
note. 

It  also  developed  that  on  December  15,  1914,  the  Warbur- 
ton  Desk  Company  had  drawn  at  sight  on  the  American 
Supply  Company  for  the  amount  of  their  account,  $1,262.50. 
The  bookkeeper  also  stated  that  he  had  heard  nothing  regard- 
ing this  draft.  The  note  clerk  at  the  bank  stated,  over  the 
phone,  that  this  item  had  been  credited  on  December  20,  1914. 

Notes  Receivable 

An  examination  of  the  notes  receivable  showed  the  follow- 
ing notes  on  hand : 

8 


Auditing  Studies 

Desk  Supply  Company,  dated  April  1,  1914,  due 
October  1,  1914,  $843.72;  interest  at  6  per  cent, 
(protest  charges  $2.31,  paid  out  of  petty  cash  and 
charged  to  "General  Expense.") $843.72 

(1)  Canadian  Desk  Company,  dated  September  1, 
1914,  due  February  1,  1915,  with  interest  at  6  per 

cent 2,500.00 

(2)  Canadian  Desk  Company,  dated  October  1,  1914, 

due  March  1,  1915,  with  interest  at  6  per  cent.. .     1,000.00 
Walters  &  Thomas,  dated  October  1,  1914,  due  Feb- 
ruary 1,  1915,  with  interest  at  6  per  cent 2,000.00 

(1)  Endorsed  by  James  Simpson,  President  of  the 
Canadian  Desk  Company ;  (2)  not  endorsed. 

Securities 

A  "Securities  Owned"  record  gave  the  following  informa- 
tion relative  to  purchases  of  such  securities  as  were  claimed 
to  be  held : 

August  22,  1913,  5M  Denver  &  Rio  Grande  1st  refunding  5's, 
1955  Int.  F.  &  A.  at  73}i,  $3,656.25,  and  interest  $14.58;  Sep- 
tember 2,  100  shares  Pa.  R.  R.  (par  $50)  at  UU^,  plus  5^, 
$5,581.25;  September  23,  50  shares  Norfolk  &  Western  com- 
mon at  105%,  plus  ys,  $5,300;  October  3,  2M  Erie  50-year 
conv.  4's  series  B,  1953,  A.  &  O.  at  69^^,  $1,390,  and  interest 
$0.45;  November  19,  80  shares  D.  &  H.  at  150>^,  plus  %,  ex. 
dividend,  $12,050;  November  21,  7M  L.  &  N.  Unified  Gold  4's, 
1940,  J.  &  J.  at  92%,  $6,466.25,  and  interest  $108.89;  November 
21,  lOM  M.  K.  &  T.  1st  gold  4's,  1990,  J.  &  D.  at  88%,  $8,862.50, 
and  interest  $188.89 ;  December  1,  25  shares  A.  C.  L.  common 
at  123J^,  plus  %,  $3,090.63;  January  23,  1914,  5M  B.  &  O., 
P.  L.  E.  &  W.  system  ref.  4's  1941,  M.  &  N.  at  87,  $4,350,  and 
interest  $45.56;  February  13,  5M  Cent,  of  N.  J.  gen.  gold  5's, 
1987,  J.  &  J.  at  117,  $5,850,  and  interest  $29.17;  May  8,  8M 
A.  T.  &  S.  F.  gen.  gold  4's,  1995,  A.  &  O.  at  95%,  $7,650,  and 
interest  $32.89;  May  8,  4M  A.  C.  L.  1st  gen.  4's,  July,  1952, 
M.  &  S.  at  94l^,  $3,770,  and  interest  $29.78;  May  29,  3M 
C.  M.  &  St.  P.  conv.  4^'s,  1932,  J.  &  D.  at  102%,  $3,063.75, 
and  interest  $66.75 ;  June  26,  5M  C.  B.  &  Q.  Ill,  div.  4's,  1949, 
J.  &  J.  at  95y2,  $4,775,  and  interest  $97.22;  June  26,  5M  L.  T. 
Ins.  Gtd.  Mtge.  5%  ctfs.  J.  &  J.  at  100,  $5,000,  and  interest 
$121.53. 

9 


Auditing  Studies 

A  visit  was  made  to  the  safe  deposit  vault  with  the  Treas- 
urer and  the  securities  were  found  intact. 

It  was  found  that  dividend  and  interest  receipts  on  all 
securities  had  been  credited  to  income. 

A  trial  balance  of  the  general  ledger  was  taken,  with  the 
following  result : 

THE  WARBURTON  DESK  COMPANY 

Trial  Balance 

12/31/14 

Folio  Debits            Credits 

1  Land  and  buildings $350,000.00 

2  Machinery  and  tools 67,581.49 

3  Horses,  wagons  and  motors. .. .  4,056.51 

4  Furniture  and  fixtures 6,352.40 

5  Securities  owned 81,591.34 

6  Treasury  stock 5,000.00 

7  Patents,  trade    marks    &    good 

will  34,157.41 

8  Cash  42,257.84 

9  Petty  cash 500.00 

10  Customers 226,664.83 

11  Drafts  and  notes  receivable. . . .  9,343.72 

12  Subscribers  to  capital  stock 7,280.00 

13  Sinking  fund 400.00 

14  Discount  on  bonds 9,958.34 

15  Legal  expense  deferred 1,250.00 

16  Organization  expense 995.03 

17  Moving  expense 926.00 

18  Advertising  paid  in  advance. . . .  213.81 

19  Freight  on  consigned  goods ....  27.93 

20  First  mortgage  bonds $160,000.00 

21  Loans  payable 58,000.00 

22  Accounts  payable 1 16,181.22 

23  Notes  payable 18,905.00 

24  Capital  stock  preferred 286,500.00 

25  Capital  stock  common 225,000.00 

26  Sales 177,276.31 

27  Cash  sales 243.27 

10 


Auditing  Studies 

28  Purchases 65,017.52 

29  Freight  account 1,472.94 

30  Labor 47,847.72 

31  Factory  account 20,270.53 

32  Selling  expense 18,498.18 

33  Salaries  of  officers 22,575.25 

34  Salaries  of  clerks 13,926.47 

35  Stationery  and  printing 1,527.00 

36  Postage 1,243.28 

37  Telegraph  and  telephone 485.26 

38  General  office  expense 2,732.14 

39  Legal  expense 1,750.00 

43  Interest 11,724.42 

44  Rent— New  York  office 1,200.00 

45  Insurance 2,563.75 

46  Taxes 4,410.00 

47  Royalty 726.39 

48  Provisions    for    depreciation  — 

horses,  wagons  and  motors. . .  2,095.74 

49  Provision     for     depreciation  — 

furniture  and  fixtures 1,769.95 

40  Interest  on  bonds 1,935.00 

41  Dividends  on  stock 1,495.00 

42  Commission 337.24 

50  Profit  and  loss  surplus 24,520.15 


$1,070,393.19  $1,070,393.19 

Reading  the  Minutes 

While  reading  the  minutes  of  the  board  of  directors  notes 
were  made  of  the  following  non-routine  transactions : 

January  15,  1908. — It  was  regularly  moved  and  seconded 
that  the  sum  of  $10,000  be  paid  to  Mr.  Parsons  for  his  services 
in  organizing  the  Warburton  Desk  Company,  and  that  the 
payment  of  the  $10,000  be  made  in  preferred  stock  of  the  com- 
pany.   Motion  carried. 

January  15,  1909.  —  On  motion  the  board  of  directors 
accepted  with  thanks  the  donation  by  Mr.  Parsons  of  $10,000 
of  preferred  stock  of  the  Warburton  Desk  Company  for  the 
purpose  of  creating  a  surplus  on  the  books  of  the  company. 

II 


Auditing  Studies 

January  15,  1911. — On  motion  the  treasurer  was  authorized 
to  loan  to  the  Parsons  Desk  Company  the  sum  of  $50,000,  and 
to  the  Davis-Hoyt  Company  the  sum  of  $20,000. 

January  15,  1914. — Mr.  Davis  moved  that  inasmuch  as  the 
disbursements  of  $25,000  for  advertising  during  1911,  1912  and 
1913  was  solely  for  the  purpose  of  acquainting  the  public  with 
the  trade  mark  and  product  of  the  company,  that  this  amount 
be  set  up  as  good  will,  as  of  December^  31,  1913.  Motion 
seconded  by  Mr.  Hoyt  and  carried. 

Errors  Disclosed  by  the  Mechanical  Work 

Invoice  of  Thompson  &  Co.,  January  24,  1914,  $245.22, 
entered  in  Purchase  journal  as  $245.22,  paid  by  check  No. 
18234  as  $254.22. 

Invoice  of  F.  A.  Ridgway,  February  16,  1914,  $10.25, 
entered  in  Purchase  journal  as  $10.00  and  paid  as  $10.00,  check 
No.  18598. 

Invoice  of  Samuel  Scarborough,  Inc.,  July  2,  1914,  $101.50, 
entered  in  Purchase  journal  as  $101.50,  paid  by  check  No. 
20010  as  $110.50. 

Invoice  of  Holbrook  &  Byers,  July  24,  1914,  $61.24,  entered 
in  Purchase  journal  as  $61.00,  and  paid  as  $61.24,  check 
No.  20154. 

Invoice  of  T.  A.  Decker,  July  25,  1914,  $754.38,  entered  in 
Purchase  journal  as  $754.38,  paid  as  $754.18,  check  No.  20175. 

Invoice  of  Ramsay  &  Quick,  July  28,  1914,  $223.32,  entered 
as  $225.52  in  the  Purchase  journal,  paid  as  $225.52,  check  No. 
20198. 

Invoice  of  Thompson  &  Co.,  July  30,  1914,  $112.45,  entered 
as  $121.45  in  Purchase  journal,  paid  as  $112.45,  check  No. 
20222. 

Invoice  of  Read  &  Co.,  August  2,  1914,  $105.00,  entered  as 
$105.00  in  Purchase  journal,  paid  as  $100.00,  check  No.  20268. 

Invoice  of  C.  B.  Hall  Company,  October  5,  1914,  $150.44, 
entered  as  $154.44  in  Purchase  journal,  paid  as  $150.44,  check 
No.  21510. 

Invoice  of  Ferris  &  Ferris,  November  2,  1914,  $22.62, 
entered  in  Purchase  journal  as  $23.62,  paid  as  $23.62,  check 
No.  21980. 

12 


Auditing  Studies 

Invoice  of  T.  A.  Decker,  November  14,  1914,  $315.55, 
entered  as  $315.05  in  Purchase  journal,  paid  as  $315.05,  check 
No.  22006. 

Invoice  of  Johnson  Brothers,  July  30,  1914,  $110.25,  was 
paid  August  14,  1914,  check  No.  20424.  This  same  invoice  was 
included  by  Johnson  Brothers  on  a  statement  rendered  Sep- 
tember 2,  1914,  and  was  again  paid  September  12,  1914,  check 
No.  21061. 

On  the  following  invoices  no  discount  had  been  deducted: 

Invoice  of :     Date.         Amount.         Paid.  Terms. 

H.  W.  Mack,  Jan.  15 $150.00  Feb.  11. . .  .1/30 

Read  &  Co.,       "    21 55.26           "  "  . . . .  1/30 

Smith  &  Smith,  Feb.  4 210.00           "  "  . . . .  2/10 

S.  M.  Knight,        "     5 100.00  March.  12. ..  .2/60 

E.  E.  Hall,  April  10 563.24  May  10. . .  .2/10  EOM 

Holbrook&Co.,  June25...  201.50  Aug.  10.... 2/60 

Read  &  Co.,  July  31 50.00           "  "...  .2/10 

S.  S.  Cook,  Oct.  25 44.20  Nov.  10 ... .  1/30 

In  distributing  the  purchase  invoices,  the  following  errors 
were  noted : 

February  15. — Thompson  &  Co.,  $156.25,  page  42  of  Pur- 
chase Journal,  entered  in  "General  Office  Expense."  Should  have 
been  entered  as  "Selling  Expense — Advertising." 

June  30,  1914. — Ajax  Trucking  Company,  $54.50,  page  64  of 
Purchase  Journal,  entered  as  "General  Office  Expense."  Should 
have  been  charged  to  "Freight  (inward)." 

July  30,  1914.— Smith  &  Smith,  $150.00,  page  64  of  Purchase 
Journal,  entered  in  "Accounts  Payable"  column  as  $150.00, 
but  in  "Stationery  and  Printing"  column,  to  which  it  was  dis- 
tributed, is  was  entered  as  $160.00. 

August  2,  1914.— William  L.  Brown  &  Co.,  $5.20,  page  68  of 
Purchase  Journal,  entered  in  "Postage"  instead  of  "Stationery 
and  Printing." 

August  3,  1914.— F.  A.  Ridgway,  $110.00,  page  68  of  Pur- 
chase Journal,  entered  in  "Accounts  Payable"  as  $110.00,  but 
distributed  to  "Selling  Expense — Advertising"  as  $100.00. 

In  footing  the  Purchase  journal  the  following  errors  were 
found : 

January,  1914,  page  34,  "Accounts  Payable"  column  over- 
footed  $10.00. 

13 


Auditing  Studies 

January,  1914,  page  36,  "Selling  Expense"  (advertising) 
column  overfooted  $10.00. 

March,  1914,  page  50,  "Accounts  Payable"  column  over- 
footed  $1.30.    Crossfooting  for  March  out  $1.30. 

July,  1914,  page  64,  "Stationery  and  Printing"  column 
underfooted  $10.00. 

August,  1914,  page  72,  "Telegraph  and  Telephone"  column 
overfooted  $10.00. 

In  footing  the  sales  book,  which  was  simply  a  summary  of 
sales,  the  errors  detailed  below  were  found : 

January,  1914,  page  4,  underfooted  $80.00. 

March,  1914,  page  16,  underfooted  $0.99. 

September,  1914,  page  52,  overfooted  $10.01. 

October,  1914,  page  55,  overfooted  $1.00. 

December,  1914,  page  61,  overfooted  $20.00. 

In  footing  the  cash  book : 

October,  1914,  Receipt  side:  "Accounts  Receivable"  col- 
umn overfooted  $10.00. 

July,  1914,  Disbursement  side.  "Accounts  Payable"  column 
overfooted  $10.00. 

An  entry  was  found  in  the  journal  under  date  of  December 
31,  1914: 

Expense $0.01 

To  Accounts  receivable $0.01 

To  adjust  control  to 
subsidiary  accounts. 

The  footing  of  the  column  in  the  Purchase  journal  "General 
Expense"  in  July,  1914,  $210.78,  was  posted  to  the  "Postage" 
account. 

In  the  journal  entry  of  November  16,  1914: 

Accounts  payable $3,910.00 

To  Notes  payable $3,910.00 

The  debit  was  posted  correctly,  but  the  credit  was  posted  as 
$3,905. 

The  footing  of  the  sales  for  March,  $18,518.20,  was  debited 
to  customers  and  credited  to  sales  as  $18,578.20. 

The  footing  of  the  sales  for  July,  $13,121.52,  was  posted  to 
the  debit  of  customers  as  $13,121.52,  but  was  posted  to  the 
credit  of  sales  as  $13,125.12. 

14 


Auditing  Studies 

On  the  credit  side  of  the  "General  Expense"  account  an 
item  of  $0.10  was  found  under  date  of  December  31,  1914, 
with  no  posting  reference.  Inquiry  of  the  bookkeeper  devel- 
oped the  fact  that  at  December  31  his  ledger  was  "out"  $0.10 
and  that  he  had  forced  the  balance.  ^ 

Inventory  i 

The  inventory  of  December  31,  1914,  was  checked  as  to 
extensions  and  footings.  The  Secretary  of  the  company  certi- 
fied that  the  inventory  represented  only  the  materials  and 
goods  on  hand  at  the  plant,  as  ascertained  by  actual  count. 
The  totals  of  the  inventory  were : 

Raw  material $12,192.50 

Goods  in  process 6,412.62 

Finished  goods 7,112.82 

The  following  information  relating  to  the  accounts  in  ques- 
tion was  obtained  by  analysis : 

Land  and  Buildings,  $350,000. 

This  account  represents  a  parcel  of  land  (500x600  feet) 
located  in  Long  Island  City,  acquired  in  October,  1911,  for 
cash  in  the  amount  of  $60,000,  and  used  for  factory  purposes. 
A  deed  to  the  property  is  found  among  the  company's  papers, 
but  has  never  been  recorded.  Building  operations  were  begun 
immediately  after  the  acquisition  of  the  land  and  were  com- 
pleted in  May,  1912,  at  which  time  the  cost  of  the  brick  and 
concrete  buildings  erected  was  $210,762.59.  Additional  charges 
have  been,  1912,  $22,162.50;  1913,  $25,723.98,  and  1914, 
$11,542.67.  The  assessed  value  of  the  property  was  in  1914, 
$245,000,  an  increase  of  $20,000  over  the  previous  year  on  the 
strength  of  which  the  company's  auditor  instructed  the  book- 
keeper to  write  up  the  land  and  building  account  to  $350,000. 
In  1913  an  end  wall  of  one  of  the  concrete  buildings  sloughed 
partly  oflf  and  $2,527.74,  included  in  the  above,  represents  the 
cost  of  replacing  it.  No  depreciation  has  been  charged  off 
because  of  the  fact  that  the  buildings  are  of  brick  and  concrete. 

Machinery  and  Tools,  $67,581.49. 

The  balance  in  this  account  represents  purchases  of 
machinery  and  tools  amounting  to  $93,426.23,  plus  cost  of 

15 


Auditing  Studies 

installing,  $783.42;  less  depreciation,  $26,628.16.  The  pur- 
chases by  years  and  months  are  as  follows :  1912 — Prior  to 
June  30,  $83,528.96,  plus  installation,  $783.42.  1913— January, 
$2,347.80;  May,  $92.50;  November,  $2,284.09;  total,  $4,724.39. 
1914_February,  $4,233.24;  December,  $939.64;  total,  $5,172.88. 
The  rate  used  in  computing  depreciation  was  12  per  cent,  per 
annum,  and  additions  were  treated  as  beginning  at  the  first  of 
month  in  which  shown.  For  example,  the  depreciation  on  the 
additions  of  January,  1913,  was  figured  from  January  1 — the 
full  year. 

Employes  of  the  company  spent  time  equal  to  $145  and 
used  material  which  cost  $97.38  in  setting  up  new  machines  in 
February,  1914.  These  items  are  not  included  in  the  above. 
Small  tools  amounting  annually  to  $688.24  and  $574.32,  respec- 
tively, have,  beginning  with  1913,  been  charged  to  expense 
(factory  account).  Inventories  of  such  tools  showed  on 
December  31,  1913,  $324.50,  and  on  December  31,  1914,  $418.75. 

Horses,  Wagons  and  Motors,  $4,056.51. 

A  transcript  of  the  account  is  as  follows: 

1914.  1914. 

Jan.     1  Balance    ...$3,227.00     July  14   C-27 $15.00 

May  25  P.  J.  22. . . .  2,437.00     Dec.  31   J-14 2,095.74 

Oct.  19  P.  J.  42. . . .      237.50         Balance    4,056.51 

Oct.  30  P.  J.  42....      265.75 


$6,167.25  $6,167.25 


1915. 

Jan.     1  Balance   ....$4,056.51 

The  balance  at  the  beginning  of  the  account,  ($3,227), 
represents  two  draft  horses  at  $350  each,  purchased  June  1, 
1909;  one  double  set  of  harness  in  the  amount  of  $65,  pur- 
chased August  1,  1913;  one  horse  truck  purchased  for  $187  on 
October  15,  1912;  one  motor  truck  (No.  2)  purchased  on 
November  10,  1912,  for  $2,275.  The  subsequent  debit  entries 
cover  respectively:  one  motor  truck  No.  3;  repairs  to  motor 
truck  No.  1,  which  had  been  entirely  written  off  prior  to  Jan- 
uary 1,  1914,  but  which  with  ordinary  repairs  will  probably 

i6 


Auditing  Studies 

last  two  or  three  years,  and  in  consideration  of  the  respective 
service  may  reasonably  be  considered  worth  $500;  and  extra 
parts.  The  credits  are:  Sale  of  old  harness  ($15),  which 
harness  is  not  the  same  as  that  included  in  the  analysis  of 
items  on  the  debit  side,  and  depreciation  ($2,09574).  The 
depreciation  has  been  computed  on  the  motor  trucks  at  the 
rate  of  33%  per  annum.  That  on  No.  2  began  to  run  Nov. 
1,  while  that  on  No.  3  was  figured  from  June  1. 

Furniture  and  Fixtures,  $6,352.40. 

This  amount  is  represented  by  the  following  account: 

1914. 

Dec.  31  J-14 $1,769.95 

Balance 6,352.40 


1914. 

Jan.      1  Balance    . . . 

$7,229.83 

Jan.    31  P.  J.    8... 

300.00 

Mar.  31  P.  J.   17... 

185.00 

July  31  P.  J.  30... 

.      325.00 

Dec.  31  P.  J.  52... 

82.50 

$8,122.35 

$8,122.35 

1915. 

Jan.      1  Balance   ...$6,352.40 

The  balance  at  the  beginning  of  the  year  is  made  up  as 
follows : 

New  York  office :  Furniture,  being  written  oH  at  the  rate 
of  10%  per  annum,  $965.56,  representing  45%  of  original  cost; 
office  equipment,  being  written  off  at  the  rate  of  20%  per 
annum,  $516.23,  representing  20%  of  original  cost;  rugs,  be- 
ing written  off  at  the  rate  of  10%  per  annum,  $120,  repre- 
senting 55%  of  original  cost;  office  partitions,  $513,  repre- 
senting original  cost  ($540),  less  amount  applicable  to  the 
months  of  October,  November  and  December,  1913,  original 
cost  to  be  written  off  over  the  period  of  a  five-year  lease  be- 
ginning Oct.  1,  1913.  Factory  office :  Furniture,  being  written 
off  at  the  rate  of  10%  per  annum,  $4,025.79,  representing  85% 
of  original  cost;  office  equipment,  being  written  off  at  the 
rate  of  20%  per  annum,  $1,089.27,  representing  50%  of  original 
cost.  Subsequent  debits  are:  $300,  efficiency  engineer  plan- 
ning arrangement  of  factory  office;  $185,  internal  office  tele- 
phone system,  New  York  office;  $325,  indirect  lighting  sys- 
tem, New  York  office ;  $82.50,  new  directors'  table.  New  York, 

17 


Auditing  Studies 

$80;  carpenter  setting  up  and  adjusting  same,  $2.50.  The 
credit,  in  the  amount  of  $1,769.95,  represents  depreciation  for 
the  year  1914. 

Treasury  Stock. 
1909.  1909. 

Jan.    15  J-2   $10,000     Mar.  15  C-1   $5,000 

1914. 

Dec.  31  Balance   5,000 


$10,000  $10,000 


1915. 

Jan.      1  Balance   ....    $5,000 

The  credit  represents  the  proceeds  of  the  sale  of  60  shares 
at  83  1/3. 

Patents,  Trade  Marks  and  Good- Will. 

1910.  1912. 

Feb.     1  P.  J.    4...  $5,000.00    Feb.     1  C-6 $756.21 

1911.  1914. 

Feb.     1  P.  J.  24...     4,000.00     Dec.  31  Balance   ..$34,157.41 

Mar.    1  P.  J.  18...        297.42 

1912. 

Jan.     1  P.  J.     1...        616.20 

1913. 

Dec.  31       J.  30...  25,000.00 


$34,913.62  $34,913.62 


1915. 

Jan.      1  Balance  ..$34,157.41 

The  debits  represent,  respectively,  a  patent  for  a  drawer 
lock  purchased  from  John  N.  Thomas,  $5,000,  patent  granted 
Nov.  1,  1908;  patents,  granted  Feb.  1,  1909,  for  a  wood  polish- 
ing machine,  purchased  from  the  Parsons  Desk  Co.  for  $4,000; 
expense  of  securing  trade  mark,  $297.42;  expenses  of  suit 
brought  by  the  Warburton  Desk  Co.  to  protect  the  wood 
polishing  patent  from  infringement;  cost  of  an  advertising 
campaign  during  1911,  1912  and  1913  to  acquaint  the  public 
with  the  company's  product. 

The  credit  ($756.21)  represents  a  judgment  obtained  and 
collected  in  the  suit  to  protect  the  wood  polishing  patent. 

i8 


Auditing  Studies 

Customers,  $226,664.83. 

A  transcript  of  the  account  is  as  follows : 

1914.  Debit  Side 

Jan.      1  Balance $139,214.36 

Jan.    31  Sales    SJ5  17,610.24 

Feb.  28      "       SJ9  16,861.46 

Mar.  31      "       SJ16  18,578.20 

Apr.  30     "       SJ24  16,340.22 

May  29      "       SJ30  17,612.50 

June  30      "       SJ37  17,027.61 

July  31      "       SJ42  13,125.12 

Aug.  31      "       SJ46  12,482.56 

Sept.  30     ''       SJ52  12,001.29 

Oct.  31      "       SJ55  12,891.31 

Nov.  30      "       SJ58  14,651.04 

Dec,  10  Bonds  Payable   J64  150,041.66 

Dec.  31  Sales    SJ61  11,520.12 


$469,957.69 

1914.  Credit  Side 

Jan.    31  Cash C3  20,106.38 

Feb.  28  Cash  C7  16,521.91 

Feb.  28  Sales  returns SRI  836.50 

Mar.  31  Cash   Cll  17,622.60 

Mar.  31  Sales  allow SAl  461.20 

Apr.  3     Notes  receivable J51  843.72 

Apr.  30  Cash  C15  19,060.20 

May  29  Cash    C19  17,621.92 

May  29  Sales  allowances SA2  312.17 

May  29  Sales  returns SR2  1,017.98 

June  30  Cash    C23  16,222.12 

July  31  Cash   C27  15,120.12 

Aug.  31  Cash  C31  15,510.16 

Aug.  31  Sales  returns SR2  595.78 

Sept.  2     Notes  receivable   J60  2,500.00 

Sept.  30  Cash C35  11,238.60 

Oct.  2     Notes  receivable J61  1,000.00 

Oct.  2     Notes  receivable J61  2,000.00 

Oct.    31  Cash   C37  11,120.10 

19 


Auditing  Studies 

Credit  Side — ^^Cont'd 

Oct.  31  Sales  allowances SA2  201.73 

Nov.  3     Notes  receivable   J63  3,000.00 

Nov.  30  Cash C41  10,215.10 

Dec.  10  Cash  (from  bankers  on  bonds) C45  50,041.66 

Dec.  31  Cash    C45  10,122.90 

Dec.  31  Expense  J64  .01 

Dec.  31  Balance  226,664.83 


$469,957.69 


The  opening  balance  consisted  of: 
Advances  to  allied  companies: 

Parsons  Desk  Co $50,000.00 

Davis-Hoyt  Co 20,000.00 


$70,000.00 


Advances  to  salesmen : 

Frank  Hutchinson  (still  employed)     $2,760.00 
Willard    Brown    (who    severed    his 
connection   with    the    Warburton 
Desk  Co.  July  1,  1914 — collection 
of  account  improbable) 5,200.00 


7,960.00 

Customers'  balances 61,254.36 


$139,214.36 

An  examination  of  the  accounts  in  the  customers  ledger 
at  the  time  of  checking  the  trial  balance  of  this  ledger  gave 
the  following  information: 

Month  during  which 

Name.                goods  were  purchased.     Remarks.  Amount. 

American  Supply  Co November $1,262.50 

Anderson  &  Bailey December 3,627.42 

Acme  Furniture  Co December 2,527 .  50 

J.  H.  Barlow November  1,136 .  25 

Bristow  &  Myers December 591 . 20 

Canadian  Desk  Co October  1,672 .  71 

Crane  &  Goddard November  3,420.16 

Deering  &  Co December   80.00 

Desk  Supply  Co September 562.00 

T.  J.  Donshea December   829.50 

20 


Auditing  Studies 

E.  &  T.  Desk  Co .December    28.86 

Evarts  &  Brown Credit  Balance,  $100. 

Fink,  Ryan  &  Heal October  1,521.92 

French  &  French December    62. 15 

Theo.  Card August   1,415.92 

A.  E.  Gilkey November 1,627.32 

Goldstein  &  Cohen December    46.20 

Harris  Brothers  &  Co.. .  .October  2,615.80 

The  Hawthorne  Co December   2,036.25 

Henderson  &  Smith Credit  Balance,  $57.21. 

W.  W.  James November 2,136.20 

The  Lane  Co Consignment  4,632. 18 

Marston  &  Co October  612.40 

Miller  Desk  Co June   .16 

S.  M.  Noyes December  58.50 

Office  Supply  House Consignment 2,210.60 

Post  &  Bro December    112.24 

Raymond  &  Co October,  1913 2,416.81 

Riland  &  Hulbert November  3,648.63 

Sole  &  Sole October  792.98 

Stern  &  Co December   5,628.50 

Tillotson  &  Son December   26.50 

Victor  Desk  Co January    2.00 

Walters  &  Thomas November  1,420.68 

T.  R.  Young December    100.00 


$48,862.04 
Credit  Balances...         157.21 


$48,704.83 


Terms  on  which  goods  are  sold,  30  days. 

Investigation  of  the  consignment  accounts  showed  that 
the  goods  which  were  consigned  to  the  Lane  Co.  ($4,632.18) 
and  the  Office  Supply  House  ($2,210.60)  represent  desk  fit- 
tings which  had  previously  been  consigned  to  the  Warburton 
Desk  Co.  by  J.  Entwhistle  &  Son  at  $4,632.08  and  T.  J. 
Smith  at  $500. 

Conversation  with  the  credit  man  revealed  the  fact  that 
Raymond  &  Co  had  been  petitioned  into  bankruptcy  Nov.  20, 
1913,  and  after  payment  of  a  first  and  final  dividend  of  15% 

21 


Auditing  Studies 

on  Aug.  1,  1914,  was  discharged  from  bankruptcy  Dec.  12, 
1914.  The  credit  man  also  stated  that  the  experience  of  the 
company  showed  that  the  bad  debts  amounted  to  about  2% 
of  the  gross  sales. 

Subscribers  to  Capital  Stock,  $7,280. 

This  account  represents  the  balance  due  on  preferred  stock 
to  the  extent  of  $11,500  sold  to  employees  at  par  during  1914. 
The  subscriptions  are  payable  in  monthly  installments  of  $5 
per  share.  The  stock  itself  has  not  been  issued,  although 
when  "subscribers  to  capital  stock"  was  debited,  "capital  stock 
preferred"  was  credited  with  $11,500. 

Sinking  Fund,  $400. 

A  clause  in  the  mortgage  governing  the  issue  of  the  first 
mortgage  bonds  provides  that  a  sinking  fund  shall  be  estab- 
lished to  provide  for  the  payment  of  the  bonds  at  maturity 
(Dec.  1,  1939). 

The  $400  in  the  sinking  fund  represents  the  first  monthly 
payment,  the  check  for  which  was  deposited  Dec.  31,  1914. 

Discount  on  Bonds,  $9,958.34. 

Representing  the  discount  on  the  first  mortgage  bonds 
issued  Dec.  1,  1914.     (See  also  First  Mortgage  Bonds  a/c). 

Legal  Expense  Deferred,  $1,250. 

Represents  the  deferred  portion  of  a  retainer  of  $3,000  for 
legal  services  June  1,  1914,  to  May  31,  1915,  paid  in  advance. 

Organization  Expense,  $995.03. 

Expense  incident  to  organization  incurred  in  1908. 
Allowed  to  remain  on  the  books  at  the  original  figure. 

Moving  Expense,  $926. 

During  February,  1914,  the  Warburton  Desk  Co.  pur- 
chased from  an  allied  company  a  number  of  wood  turning 
machines.  The  cost  of  the  machines  was  $4,233,24  and  the 
cost  of  moving  them  $926. 

Advertising  Paid  in  Advance,   $213.81. 

This  covers  payment  for  advertisements  to  appear  in 
January  and  February,  1915. 

22 


Auditing  Studies 

Freight  on  Consigned  Goods,  $27.93. 

Under  an  agreement  with  T.  J.  Smith,  who  consigned  to 
the  Warburton  Desk  Co.  $500  worth  of  desk  fittings,  he  is  to 
reimburse  the  Warburton  Desk  Co.  for  any  freight  charges 
in  connection  with  the  reconsignment  of  this  merchandise. 
The  charge  in  this  account  represents  the  cost  of  freighting 
the  fittings  to  The  Lane  Co. 

Purchases,  $65,017.52. 

An  analysis  of  the  account  showed: 
1914.  Debits. 

Jan.     1  Balance..   $15,277.02 

Inventories  on  hand : 

Raw  material  (at  cost) $6,524 .  36 

Goods  in  process  (estimated)      3,115.26 
Finished  goods  (at  cost) 5,637.40 


$15,277.02 

Jan.    31  P.  J.    4. .  $17,340.20  Purch.  of  lumber,  etc.,  in  Jan. 

Mar. 31  P.  J.  16..      9,430.88  "      "       "          "       "Mar. 

June 30  P.  J.  28..    10,160.25  "      "       "          "       "June 

Oct.  31  P.  J.  60..      8,240.60  "      "       "          "       "  Oct. 

Nov.  30  P.  J.  70..      7,140.28  "      "       "          "       "Nov. 


Total    Debits . . .  $67,595 .  23 
Credits. 
Apr.  30  P.   R.  3..    $1,040.00     Purchase  returns. 
Oct.  31  P.   R.  8..      1,537.71      Purchase  allowances. 


Total    Credits...    $2,577.71 


Balance    $65,017.52 


Among  the  contracts  found  in  the  contract  file  was  one  with 
the  Michigan  Lumber  Co.  for  deliveries  of  lumber  on  the 
15th  of  October,  November,  December,  January,  February 
and  March.  Inquiries  revealed  the  fact  that  a  bill  of  lading 
and  an  invoice  for  $7,250.28  had  been  received  Dec.  19,  1914, 
but  as  the  lumber  was  in  the  freight  yards  at  Long  Island 
City  on  Dec,  31,  1914,  the  invoice  was  not  taken  up  on  the 
books. 

23 


Auditing  Studies 

Freight  Account,  $1,472.94. 

Represents  inward  freight  and  cartage,  $896.23;  outward 
freight  and  cartage,  $576.71. 

Labor,  $47,847.72. 

Represents  labor  paid  during  1914.  The  payroll  for  week 
of  Jan.  3,  1914  ($708.25)  included  $476.50  applicable  to  Dec. 
29,  30  and  31,  1913.  The  payroll  for  the  week  of  Jan.  2,  1915 
($965.20)  included  $860,  applicable  to  December,  1914. 

Factory  Account,  $20,270.53. 

Analysis  of  account  showed  that  it  consisted  of  the  follow- 
ing: Superintendence,  $6,000;  small  tools,  $574.32;  heat, 
$258.13;  light,  $483.28;  power,  $1,837.68;  depreciation,$l  1,1 17.12. 

Selling  Expense,   $18,498.18. 

Analysis  of  account  showed:  Commissions,  $12,843.26; 
traveling  expenses  of  salesmen,  $1,132.47;  advertising,  $4,522.45 
($4,736.26  minus  $213.81). 

Salaries  of  Clerks,  $13,926.47. 

New  York  office,  $7,643.20.    Factory  office,  $6,283.27. 

Legal  Expense,  $1,750. 

Paid  $3,000  June  1,  1914,  for  year  June  1,  1914— May  31, 
1915,  less  deferred  $1,250. 

Interest,  $11,724.42. 

Analysis  of  the  account  showed:  Cash  discount  on  sales, 
$3,126.50;  interest  on  bond  issue  of  Parsons  Desk  Co.,  $5,000. 
(This  represents  an  advance  to  the  Parsons  Desk  Co.  on  Oct. 
1  at  a  time  when  the  Parsons  Desk  Co.  was  unable  to  meet 
the  maturing  interest  on  its  bonds.  It  was  made  to  protect 
the  loan  of  $50,000  to  this  company  and  the  bookkeeper  was 
instructed  to  charge  it  off,  as  the  officers  of  the  Warburton 
Desk  Co.  did  not  expect  that  it  would  ever  be  returned)  ;  in- 
terest on  loans  payable,  $3,480;  interest  on  notes  payable, 
$826.43;  interest  on  notes  receivable,  $524.17;  interest  on  bank 
balances,  $184.34. 

Insurance,  $2,563.75. 

The  insurance  register  showed  the  following  policies : 
New  York  office:   Fire,  term   one  year;   expires   Oct.    1, 

1915;  premium  paid,  $63.75. 

24 


Auditing  Studies     r^  >  -  '  '.':'::  /; 

Employers'  Liability:  Factory,  term  one  year;  expires 
Jan.  1,  1916;  rate,  $.25  per  $100  wages  paid  and  $.10  per  $100 
salaries  paid  clerks  and  superintendent.  Premium  paid  Jan.  1, 
1914,  $100. 

Factory:  Blanket  policy  insuring  against  loss  by  fire; 
buildings,  $250,000;  machinery  and  tools,  $60,000;  raw  ma- 
terial, goods  in  process  and  finished  goods,  $15,000;  horses, 
wagons  and  motors,  $4,000;  furniture  and  fixtures,  $4,000. 

Excerpts  from  policy  (taken  when  reading  it). 

Insurance  carried  under  a  "mutual"  plan. 

Warburton  Desk  Co.  paid  June  30,  1914,  on  $323,000  at  a 
rate  of  $2.4768  per  $1,000  per  year;  three-year  term,  $2,400. 

Experience  of  this  group  of  mutuals  shows  net  cost  of 
carrying  members'  insurance  $.33  per  $1,000  per  year. 

At  expiration  of  policy,  after  distributing  pro  rata  this  cost 
of  carrying,  the  balance  of  the  $2,400  is  to  be  returned  to  the 
Warburton  Desk  Co.  Under  terms  of  policy,  the  Warburton 
Desk  Co.  insurance  is,  however,  contingently  liable  in  addi- 
tion to  the  premium  paid  for  an  amount  equal  to  the  premium, 
namely,  $2,400. 

First  Mortgage  Bonds,  $160,000. 

Represents  the  issue  of  6%  twenty-five-year  bonds  on 
December,  1914;  sold  to  brokers  at  93  3/4,  but  shown  on  the 
companies'  books  as  $150,041.66.  The  $41.66  represents  mis- 
cellaneous expenses  in  connection  with  the  issue  chargeable 
against  the  brokers,  but  erroneously  considered  and  treated  by 
the  bookkeeper  as  having  affected  the  account  for  bonds. 

Accounts  Payable,  $116,181.22. 

Contains  $50,000  loaned  to  the  company  by  the  President. 
Notes  Payable,  $12,916. 

July     1,1914    Due   March    1,   1915 $5,000  Int.  6% 

Aug.  31,  1914    Due   March    1,   1915 5,000  "     " 

Sept.  30,  1914    Due    April    1,    1915 5,000  "     " 

Nov.  16,  1914     Due    May    16,    1915 3,910  "     " 

Capital  Stock  Preferred,  $286,500. 

Capital  stock  preferred  authorized  Jan.  1,  1908,  at  organi- 
zation of  company,  3,000  shares  of  par  value  of  $100,  $300,000. 

25 


^A 1 1'  ^\'*J^\'^  "fs  I  ..J  /'■^""I'  ^^Auditing  Studies 

Capital  Stock  Common,  $225,000. 

Authorized,  3,000  shares  of  a  par  value  of  $100,  $300,000. 
Issued  and  outstanding,  $225,000. 

Sales,  $177,276.31. 

Sales  to  customers,  $173,858.89;  consignments  made,  $6, 
842.78;  sales  returns,  $2,450.26;  sales  allowances,  $975.10. 

Cash  Sales,  $243.27. 

Contains  the  proceeds  of  the  issuance  of  267  locker  keys 
to  employees  at  $.25  each.  Deposit  to  be  returned  upon  sur- 
render of  keys. 

From  the  above  statement  of  facts  prepare: 

(a)  Complete  working  papers  covering  the  audit. 

(b)  Report  to  be  rendered  as  i>er  engagement  blank. 


26 


3G0398 


UNIVERSITY  OF  CALIFORNIA  UBRARY 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 
BERKELEY 


THIS  BOOK  IS  DUE  ON  THE  LAST  DATE 

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MAY  31  1918 


